Investors who take an interest in First National Corporation (NASDAQ:FXNC) should definitely note that the Independent Vice Chairman & Secretary of the Board, Gerald Smith, recently paid US$18.29 per share to buy US$152k worth of the stock. While that's a very decent purchase to our minds, it was proportionally a bit modest, boosting their holding by just 3.3%.
First National Insider Transactions Over The Last Year
Notably, that recent purchase by Gerald Smith is the biggest insider purchase of First National shares that we've seen in the last year. So it's clear an insider wanted to buy, at around the current price, which is US$18.75. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the First National insiders decided to buy shares at close to current prices.
First National insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around US$14.97. To my mind it is good that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
First National is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. First National insiders own about US$13m worth of shares. That equates to 14% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The First National Insider Transactions Indicate?
It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Insiders likely see value in First National shares, given these transactions (along with notable insider ownership of the company). While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that First National has 2 warning signs and it would be unwise to ignore them.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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